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Alex Genadinik, 33, borrowed $20,000 from his mom last year to
launch Problemio, a startup that makes mobile apps for small
businesses. Carlo Cisco, 26, has taken $150,000 in
convertible-note investments from his relatives since 2012 to
expand Select, his New York City dining, travel and entertainment
discount club. And over the past five years, Andrew Angus, 34,
has borrowed from his mom $500,000 (half her net worth) to keep
up with the exponential growth of Switch Video, his
animated-video production company.

Parents meddling in the business
Smirks fromindustry insiders
Lifetime of guilt if startup tanks

None of these transactions came without consequence or regret.
"It might be the easiest money to get," Cisco says, "but it's
probably going to be the most important money that you ever have,
because you're not going to want to let them down."

If you plan to spend Thanksgiving dinner hitting up Mom and Dad
for startup cash, first listen carefully to what these 'treps
recommend.

Invest your own money first. Cisco, a former Groupon staffer,
burned through $40,000 of his savings to launch FoodFan, a
restaurant-review website that was the precursor to Select. A
$100,000 convertible note from investors helped him forge
relationships with restaurants and create an early version of his
platform. By the time he asked his family for cash, FoodFan
listed 850,000 restaurants and 50,000 menus. "We had an
incredible brand name and a massive amount of data," Cisco says.

Next, hit up strangers. Third-party validation from outside
financiers can strengthen your pitch to the 'rents. Angus, who
launched his business in 2006 in Collingwood, Ontario, says a
$250,000 loan from Canada's Centre for Business and Economic
Development helped him sell his mother on his plans. Mom opened a
home-equity line of credit to pay off Angus' loan at a lower
rate, and she now has a convertible-note investment in the
company, to be paid back in five years with a 6 percent annual
interest rate.

Cisco seconds the suggestion to tap outside investors. He turned
to relatives only after several angel investors offered him
amounts ranging from $25,000 to $100,000 each in exchange for 6
to 10 percent equity--slices of the pie he felt were too big to
give away. Through convertible-note loans from his family, Cisco
held off on negotiating a price for his company too early. When
he finally did raise an additional $150,000 from outside
investors, his family's stake in the company converted to
straight equity.

Get it in writing. Genadinik admits he regrets the "very, very
informal" loan agreement he made with his mother last April.
There was no timetable, no interest rate, no contract, nothing.
Roughly six months later, his mom wanted her $20,000 back.
Although Problemio had revenue by then, Genadinik didn't have the
cash lying around. Rather than ruffle Mom's feathers, he took out
a short-term microloan and sold $15,000 in stock to pay her back,
incurring unwanted interest and costs in the process. Lesson
learned: Sign a contract with family financiers so that
expectations are crystal clear.

Don't ask for too much. If Switch Video fails, Angus' mom will
lose her home, and he'll have to help her find a new place to
live. Fortunately, business is thriving, with more than $2
million in annual revenue and customers such as Facebook, IBM,
HP, Microsoft and American Express.

Select founder Cisco cautions against borrowing more than your
parents can afford to lose. "You do want the amount to be enough
that you have a shot," he says. "But you don't want it to be so
much that someone has a problem if it doesn't work out."

Remember, you will have to face these people for many
Thanksgivings to come.